But the news that Erlanger would soon be getting access to more than $30 million from two federal funds was no joke.

The hospital heralded the decision as a chance to bring stability to the public hospital, which has sustained a series of heavy losses and funding cuts over the last several months - leading executives to freeze vacation time accrual in an effort to staunch the losses.

Last month, Erlanger CEO Kevin Spiegel said the hospital was at a tipping point, and warned that layoffs could be on the table if access to the federal pool was denied.

"Our collective voices have been heard, and I am gratified we have finally been acknowledged for the mission, dedication and hard work we do on behalf of this community," Spiegel, who marked his first year with the hospital on Tuesday, wrote in the memo to employees.

"We not only deserved our fair share of this funding, but we earned it by providing this community close to $90 million in uncompensated care."

The announcement was the culmination of a months-long effort by hospital leaders to advocate for access to the money. Last month, Spiegel traveled to Washington, D.C., with other state medical representatives to speak with U.S. Centers for Medicare and Medicaid Services (CMS) officials and local congressional leaders about the funding.

The money comes from two key pools. The first is what's called the Public Hospital Supplemental Payment Pool - a funding mechanism that could allow Erlanger to draw down tens of millions of dollars through intergovernmental transfers.

As of Tuesday, Erlanger officials said it was still unclear how much money they would be able to get from that fund, but congressional leaders said it would be $30 million.

"This support is crucial for Erlanger to continue their great service as a premier public hospital serving the people of Chattanooga and East Tennessee," said U.S. Rep. Chuck Fleischmann, R-Tenn, in a statement about the pool.

Nashville General Hospital and The Regional Medical Center in Memphis both receive millions from the fund, but Erlanger had been left out of the pool until CMS approved a waiver Tuesday to include the Chattanooga hospital.

Fleischmann said the decision "rights a wrong that had been going on for too many years."

Millions more in funds will come from the restoration to Tennessee of a program that will provide approximately $80 million for Tennessee hospitals to share to help care for the uninsured.

Erlanger CEO Kevin Spiegel

Photo by
Doug Strickland/Times Free Press.

Tennessee is the only state in the nation that does not have permanent access to the Medicaid "disproportionate share" program, as it's called. Instead, the state has relied on annual temporary fixes - which failed to pass Congress last year, leaving hospitals across Tennessee without millions in needed funds.

Erlanger officials say the hospital lost approximately $8.5 million from the lapse.

U.S. Sens. Lamar Alexander and Bob Corker, R-Tenn, who have been pressing for a permanent fix to Tennessee's access to the program, applauded the CMS decision to grant the temporary waiver.

But both said they would continue to seek a more permanent solution "so Tennessee patients, doctors and hospitals are not faced with this uncertainty each year," Corker said in a joint statement with Alexander.

"There's no reason in the world why Tennessee should be the only state without this kind of payment," Alexander said.

Dr. Chris Young, president of the Tennessee Medical Association and an Erlanger physician, called the federal decision to restore the fund "a sign of goodwill" between Tennessee and the federal government at a time when relations between the two over health reform are on edge.

"It's a great victory - it really is, and it doesn't come a minute too soon," he said. "It doesn't solve all the problems, but stabilizes things for the time being."

The next step, Spiegel said, is to convince county leaders to approve additional funding for Erlanger beyond its annual $1.5 million contribution.

Spiegel, who met with Hamilton County Mayor Jim Coppinger on Tuesday afternoon, has previously requested that the county and city contribute $5 million each.

Erlanger - which the publication Modern Healthcare recently named the ninth-largest public health system in the country - receives the least amount of local government funding for the level of safety-net care it provides, a national public hospital association found earlier this year.

Meanwhile, at the hospital, Young said the mood among employees was upbeat.

"They've had enough bad news for so long that this was a breath of fresh air," Young said. "We're glad it isn't an April Fools' joke."